Apple Has Worms: Tech Weekly

NEW YORK ( TheStreet) -- What would a week in technology be without Apple ( AAPL) as the lead story? Except this story isn't about a new product or the stock hitting an all-time high, it's about concerns the company's products are getting stale and a drop in share price.

Apple shares have come under pressure for a variety of reasons, as the bears come out of their caves and poke holes in the story. Innovation is lacking. Too many products too soon. The marketing isn't what it was. All this has impacted the stock, and there's also been chatter that Samsung is hurting Apple.

Samsung's Galaxy S III surpassed the top-selling Apple phone during the third quarter, Strategy Analytics reported this week, selling 18 million units vs. a reported 16.2 million for the iPhone 4S. Apple launched the iPhone 5 in late September and reportedly sold 6 million units prior to the end of the third quarter.

Despite the popularity of the Galaxy S III, consumers are still clamoring for Apple's latest iPhone, the iPhone 5. Supplies are constrained, with Apple's manufacturing partner Foxconn Technology reportedly having problems keeping up with demand.

Foxconn Chairman Terry Gou discussed the difficulties of meeting the incredible demand for the iPhone 5 this week. "It's not easy to make the iPhones. We are falling short of meeting the huge demand," he told reporters.

Though Apple has been in the doldrums lately, one of its suppliers is doing exceptionally well, as Qualcomm ( QCOM) reported better-than-expected earnings on Wednesday.

The San Diego-based company reported earnings of 89 cents a share on $4.87 billion in revenue for its fiscal fourth quarter, up 18% year over year and 5% sequentially. Analysts polled by Thomson Reuters expected the chipmaker to earn 82 cents a share on $4.66 billion in revenue.

Qualcomm also said it expects a strong first quarter, as smartphone demand, particularly at the high end, continues to be robust. The company anticipates revenue between $5.6 billion and $6.1 billion, and non-GAAP EPS from $1.08 to $1.16. Analysts surveyed by Thomson Reuters were looking for revenue of $5.30 billion and EPS of $1.00.

Shares gained 3.9% over the week to close at $61.62.

Cloud computing company Rackspace ( RAX) reported third-quarter earnings that were in line on Tuesday, as revenue rose 27% year over year.

Rackspace reported earnings of $27.2 million, or 19 cents a share, on revenue of $335.9 million. Analysts polled by Thomson Reuters were looking for earnings of 19 cents a share on revenue of $335.9 million.

Rackspace shares closed the week down 9.1% at $60.48.

Not all is rosy on the earnings front, as Groupon ( GRPN) badly missed earnings estimates on Thursday amidst concerns over the viability of its business. The company is transitioning itself from a daily deals site, and focusing on its Goods business, which has lower margins.

Groupon reported break-even earnings on $568.8 million in revenue. Analysts polled by Thomson Reuters were looking for earnings of 3 cents a share on $590.1 million in revenue. Revenue rose 32% year over year, but Wall Street was looking for more.

Groupon provided fourth-quarter revenue guidance, that at the midpoint, was better than Wall Street's forecast. Analysts expected Groupon to generate $633.87 million in revenue, earning 4 cents a share. Groupon expects revenue to be between $625 million and $675 million.

Shares of Groupon plunged 28% this week to finish at $2.76.

Though many are concerned about the looming threat of the fiscal cliff, telecom companies are actually ramping up spending, as demand for smartphones and tablets continues.

AT&T ( T) announced Wednesday it will spend $14 billion over the next few years building out its infrastructure, particularly its wireless infrastructure.

AT&T will spend $8 billion a year to continue expanding its 4G network by 2014, and an additional $6 billion on wireline equipment that serves business customers.